Michael Reddell: Former Reserve Bank Economist on young people being hit hard by unemployment

Young people continue to bear the brunt of job losses. 

The latest Stats NZ figures reveal the unemployment rate among those aged 15 to 19 hit 23%, the highest in more than a decade. 

The age group also lost more than 70% of the 32,000 net jobs lost last year. 

Former Reserve Bank economist Michael Reddell told Mike Hosking young people typically bear the brunt. 

He says it's never got below around 13% even when the economy is at its strongest. 

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Episode Transcript

Speaker 1 (00:00):
When we left for the day off yesterday, we were
standing by for the jobs right. Of course, it came
in at five point one. It's one hundred and fifty
six thousand New Zealanders looking for work. One of the
standout numbers was the unemployment right now for fifteen to
nineteen year olds is twenty three percent, which is the
highest in the decade. Former Zerbank economist Michael Rodell's withetherus Michael,
morning to you.

Speaker 2 (00:19):
Welcome.

Speaker 1 (00:19):
Am I old fashioned? But at fifteen you've got nothing
to offer the economy and you shouldn't be registered as unemployed.
You should be in school or training, shouldn't you ur them?
A is that just old world thinking?

Speaker 2 (00:30):
Well, that's tally true. I mean, if you're fifteen, you've
got to be at school, So I mean fifteen to
nineteen category has always been the numbers bunch shed an
awful lot of light on things, and you know most
sixteen year olds are in school as well. But remember
this isn't registered as unemployed. This is when the people
from SMZ sets New Zealand bring you up and say
are you working? If you're not working, were you're looking

(00:51):
for a job last week? Are you ready to start
work for a job. So if like my kids, you'd
happily have had a summer job over holidays, you just
can't fired one, even though you're going back to university
in February, you count as unemployed in these numbers.

Speaker 1 (01:04):
Right, So what we're finding out is in a difficult economy,
it is the vulnerable who are hit the most most often.
Is that fair?

Speaker 2 (01:11):
Absolutely? And young people definitely are the ones to bear
the brunt new entrance to the labor market when things
it tough. So this series you mean you quoted the
twenty four percent number, it's never got below about twelve
thirteen percent, even when the economy was at its strongest.
It's been up at these sorts of levels the last
couple of times unemployment surged. But we don't help ourselves
as well by having really high minimum wages for young people,

(01:34):
as you put it, often don't have a lot to
offer to the labor market starting out.

Speaker 1 (01:37):
And so how long, even if the economy turns round
to the latter part of twenty five, how long before
they start to get mopped up in a growing economy
and the number of returns to some sort of normality.

Speaker 2 (01:47):
Well, again, once you look at the last couple of
cycles of the early nineties and the global financial crisis.
Once the aggregate unemployment number stops, it starts dropping, you'll
see the young person one tend to drop away quite sharply.
We went from about twenty five percent to seventeen in
not much more than a year or so in twenty
twelve thirteen.

Speaker 1 (02:07):
Do you agree broadly with the idea that by the
latter part of this year we're going to be better
than we are now or we just don't know?

Speaker 2 (02:15):
Well, we just don't know, particularly with the Russians that
Trump's putting on the world economy, right, you know, the
trade war has temporarily been semi suspended, but who knows.
We will be very later this year. The trustrates coming down, Yes,
certainly things should be a little bit better domestically. That
the world's a really unsettled placed right now.

Speaker 1 (02:31):
That is the truth. When you talk about interest rates
coming down in a week or so. The rb are
up for twenty twenty five is at fifty points. Do
we think do we need the.

Speaker 2 (02:37):
Fifty Well, that's pretty much more promise for Christmas. It
certainly was the right course me. We fer to puts
beyond there as well, based on the inflation numbers that
we've been seeing recently that have been really low and
pretty near the point of the target rings out.

Speaker 1 (02:52):
All right, Michael, good to talk to you appreciate it.
Michael Radell, former Reserve Bank economists. For more from The
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